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Vice-Squad

Bizarro hedge-fund manager Michael Burry (Christian Bale) creates credit-default swaps and hangs tight when investors in his fund see their money disappearing before the bubble bursts. Deutsche Bank trader Jared Vennett (Ryan Gosling) and de facto partner Mark Baum (Steve Carell) figure out the risk to the whole economy that this bubble created, thanks to collateralized debt obligations that have grown much larger than the thing being securitized. Boulder, Colorado garage investors Charlie Geller and Jamie Shipley (John Magaro and Finn Whitrock), who get in on the action thanks to former Smartest Guy in the Room Ben Rickert (Brad Pitt), decide to blow the whistle when a disgusted Pitt reminds them that their cashing in requires the economy to collapse. The economy collapses. Nobody goes to jail.

Did that make sense? Right at the start of a review? It sure didn’t when they acted it out in Adam McKay’s The Big Short. So McKay builds in fourth-wall-breaking interjections that help the viewer out.

In an early scene, for example, narrator Gosling notes that the audience may not understand all the Wall Street terminology the characters are tossing around. “Does it make you feel bored or stupid?” he asks, and then says he has a novel solution, which turns out to be Margot Robbie in a bubble bath. The Australian actress addresses the camera and explains what subprime mortgages are. In between, she blows the bath foam around, sips champagne from a flute, and luxuriates in the aura of being one of the most gorgeous women in the world. “You got all that?” she asks at the end of her explanation. “Now fuck off.”

The Big Short is an acclaimed movie, scoring 87 percent “fresh” at Rotten Tomatoes, and that scene (along with other cameos featuring Anthony Bourdain with some fish and Selena Gomez playing blackjack) is often singled out for praise. It is funny, or at least entertaining in an absurdist way. And rhetorically brilliant as a counterpoint in style to the movie’s main flow.

But it also embodies what is wrong, very wrong, with the movie as a whole. Robbie explains that Wall Streeters love to use jargon so you’ll get confused, not notice what they’re doing, and feel obliged to trust them. “Or better yet, leave them alone,” she says with the wicked grin of someone letting you in on a naughty secret. Now you, the viewer, are one of the in-crowd.

But not really. What several movie critics have said—that this film de-obscures the 2008 financial crisis—isn’t true. The Big Short is tough to follow unless you already understand investment banking. (I largely do not, but that makes my un-de-obscuring relevant.) I left Oliver Stone’s Wall Street (1987) thinking I at least understood what had gone on; that wasn’t the case here.

The above-mentioned characters see things happen, and make things happen, but they don’t have a whole lot to do with one other. The Big Short reminded me, in this respect, of Syriana (2005) and The Thick of It (2005), both of which lost control of their sprawling stories. The market collapses of 2007-2008 were really really really complicated, with lots of blame to go around. But in lieu of absorbing the many intricacies and details as they accumulate, the audience is offered thematic flashcards now and again, bearing the oversimplification that it naturally prefers: the Greed of Them!

The three biggest stars give performances that can only be called ghastly. Carell’s first scene involves a Bernie Sanders-like rant about banks being all about “how can you screw working people.” He’s referring to overdraft rules. It’s about as convincing, in an investment banker, as a pacifist boxer (but very good as an early flashcard). Carell also wears a perpetual “Are you effing-kidding-me” sneer, with his lips curled more than Shirley Temple’s hair. It’s like watching Oscar the Grouch, played straight.

Bale overacts similarly, albeit in a different register—Attention Deficit Disorder and tics and the loudest silences you’ve seen since his Oscar-winning performance in The Fighter (2010), but without a character, a context, or a brother to play off of like he had in that film.

And then there’s Pitt, a co-producer of the film, essentially reprising his 12 Years a Slave (2013) role as The Cameo Voice of Moral Rectitude. Here he’s a disgruntled now-hippie hiding behind a beard and glasses; he of course manages to save the day for his two underlings.

Pitt’s homiletic performance and role point to the central flaw in The Big Short, especially when combined with the Robbie explanation that Wall Street wants to snow you. Hollywood movies have their own ways of achieving the same effects as Wall Street does — that is to say, hoping to make you feel mentally obliged to trust them. And this parallelism is something the film structurally can’t acknowledge . . .  not without undermining the homiletics.

One such way is comedy. Indeed, a smirking glibness plagues The Big Short and most of its efforts at comedy, especially in its  incredibly fast montages, often surrounding Bale and his email lists and phone calls and heavy-metal music on the earphones. Typical of today’s Cuisinart editing styles, the movie montages don’t give you time to register what the images are about as they flash by, but do let you react (force you, in fact) as mere and pure sensation.

Another is glamor, which can hide a lot of sloppy thought behind the face of Margot Robbie. She says, and others repeat the refrain throughout, that “the housing market is filled with bad loans.” Okay, but did you notice what got elided by the passive voice? At the risk of sounding like the little boy who wants to know what the turtle is standing on, why did banks make the bad loans in the first place? One shouldn’t so much wonder why bad loans got bundled into securities, and then credit-default swaps, but why these bad loans even existed to be bundled. The first lender makes loans on the expectation of getting paid back, so there wouldn’t seem to be an obvious answer. And because a borrower has legal and moral obligations to pay a loan back, he has some derivative obligation not to take out a loan he can’t pay back. Doesn’t he?

My gosh, it’s almost as if The Big Short doesn’t want you to think about the whole housing market and how it reached that perilous state. Might the government have inflated the housing bubble, imposed affordable housing mandates on Fannie Mae and Freddie Mac (proper nouns that may … may … have been mentioned twice in the movie), or encouraged looser standards for taking out a mortgage? Might people have gotten mortgages they couldn’t handle based on these absurdly weak criteria? (See Brian Domitrovic’s recent post on this site, which lays out what happened.) Actually, there is mention of looser underwriting standards in The Big Short. But it’s in the context of the film’s two sequences that take place outside of financial institutions — an investigative trip to Florida to take the pulse of the real-estate market (“Is there a bubble?”) and a journey to Las Vegas for a securitization conference.

The former sequence shows us a minority family who, it’s specified, are paying the rent but the (unseen) landlord isn’t paying the mortgage. They’re the only actual home-dwellers in The Big Short, a most conveniently chosen case. We also see a stripper whose time Steve Carell rents so she can get all sexy and strippery while the 40-year-old virgin tries to ask her about her adjustable-rate mortgage that is about to “adjust” to levels she can’t pay. He learns she has five mortgages and a condo. While her case isn’t as heavy on the pathos as the family (whom we later see living out of their car), she is also specifically set up as a victim of the local white-bro bankers who brag, one character disapprovingly notes, about what easy marks immigrants and strippers are. The former are easy to bamboozle and the latter prefer to operate on a cash basis, the bros boorishly boast.

The social-justice-warrior disapproval really starts to pick up steam with the securitization conference in Las Vegas, which is described as what would happen if “someone had a piñata full of white people who suck at golf.” There’s even a sudden cut from a scowling Carell to, of all things, a gun range, where bros from Central Casting fire Uzis at Osama bin Laden targets. They even bump chests to celebrate successes, fercryinoutloud.

The villainy is summed up at movie’s end, with the declaration that the country got over the housing crisis in its “usual” fashion—not by jailing the bankers lol (on what criminal charges, fastidious rule-of-law sticklers might wonder in the face of the mob), but by “blaming immigrants and poor people” as usual, plus teachers this time, in an aside.

That line shows the film’s real concern isn’t economics or history, but scapegoating. It’s as if Adam McKay knows that people don’t judge based on the facts, but on what seems authoritative and familiar. But Margot Robbie is hot. And that bubble-bath scene is funny. And white bros are jerks, amirite!!

You got all that? Now fuck off.

Reader Discussion

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on January 13, 2016 at 10:18:00 am

Well done!

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Mark Pulliam
on January 13, 2016 at 11:44:42 am

Gosling notes that the audience may not understand all the Wall Street terminology the characters are tossing around. “Does it make you feel bored or stupid?” he asks….

Wall Streeters love to use jargon so you’ll get confused, not notice what they’re doing, and feel obliged to trust them. “Or better yet, leave them alone,”….

“[Jargon] serves as a fence that keeps others outside and respectful, or leads them to ignore what is going on because it is too much trouble to find out.” Edwin Newman, A Civil Tongue 146 (1976).

“[T]he housing market is filled with bad loans.” Okay, but …. why did banks make the bad loans in the first place? One shouldn’t so much wonder why bad loans got bundled into securities, and then credit-default swaps, but why these bad loans even existed to be bundled. The first lender makes loans on the expectation of getting paid back, so there wouldn’t seem to be an obvious answer. And because a borrower has legal and moral obligations to pay a loan back, he has some derivative obligation not to take out a loan he can’t pay back. Doesn’t he?

My gosh, it’s almost as if The Big Short doesn’t want you to think about the whole housing market and how it reached that perilous state. Might the government have inflated the housing bubble, imposed affordable housing mandates on Fannie Mae and Freddie Mac (proper nouns that may … may … have been mentioned twice in the movie), or encouraged looser standards for taking out a mortgage? Might people have gotten mortgages they couldn’t handle based on these absurdly weak criteria? (See Brian Domitrovic’s recent post on this site, which lays out what happened.)

Two points that challenge the libertarian account of the housing bubble.

1. Origins of the housing bubble: Some regard it as arising from government policies that created an excessive supply of unsound mortgages foisted upon innocent investors. But others regard it as arising from abundant wealth that created unprecedented demand from investors who wanted higher returns than offered by the moribund government bond market, and pretended that there was some way to achieve this without bearing added risk. That is, investors and their agents put pressure on lenders/loan processors to produce ever more mortgages as quickly as possible, and put pressure on regulators to relax the standards that restricted the supply of these financial instruments. Quantity, not quality, was Job One.

True, this should not relieve the borrower of responsibility for borrowing more than he could afford. But how does one know how much one can, or should, afford? This is a hard fact for libertarians to face: Most of us lack the financial sophistication to make such judgments. While financial literacy reflects abstract reasoning and forecasting, financial behavior is more a function of culture. People who lack parents/advisers that have a modicum of experience with mortgages are supremely vulnerable.

Consider the current student loan bubble: How many of us recall taking out student loans for sums that exceeded anything we had ever dealt with before – based not on any clear calculation of cost and benefit, but on trust in our parents/advisers that the investment would be worth it? Some of us were vindicated in this trust; some, not so much. Today, people from families without experience with college are taking out loans and signing up for classes based largely on the notion that -- well, that's what upwardly-mobile people do. So they ape that behavior as best they understand it, making them prey for the Trump Universities of the world.

They may not really qualify for admission to higher education. They may end up with no degree – or a degree that is not accepted by employers. Doubtless, market forces will provide some guidance to these first-generation students in appreciating the distinction between accredited and non-accredited schools, or a credential that is accepted in professional circles vs. a credential with is not. At least, it will guide them the secondtime around. But consumer protection policies might provide a more effective remedy.

2. Consequences of the housing bubble: The biggest conceptual problem of the housing bubble was not what happened to the subprime borrowers or the lenders or the investors. The biggest problem was what happened to all other people, who found themselves in an economy that was gridlocking as bankers found that they could not trust in their own assets, let alone the assets of co-parties. The externalities were enormous.

That’s the nature of the business cycle: In a “state of nature,” markets surge and crash, both promoting and harming the interests of innocent third parties as they go. Arguably government interventions can moderate this dynamic. The interventions will never be perfect. The costs of some interventions will exceed their benefits, needlessly depressing economic activity. Yet failures to intervene may lead to crashes that are also costly. Do we measure the consequences of government intervention relative to some imagined world in which business cycles do not occur? Or relative to the level of surges and crashes that would occur in the absence of government intervention?

(An ancillary observation: Various people have estimated the “cost of the crash” by comparing the market value of assets before the crash to the market value afterwards. Yet there’s widespread agreement that the market values of these assets before the crash were artificially inflated; we have no basis to regard those values as a benchmark for anything. Rather, the “cost of the crash” should reflect something about the cost of misallocating resources, transition costs, and externalities.)

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nobody.really
on January 13, 2016 at 13:05:11 pm

nobody.really,

Can I ask a favor to make it a little easier to understand your posts? When you refer to "libertarians," do you have an archetype in mind? Are you thinking of anarcho-capitalists, Randians, people who think that central banks are illegal, minarchists, civi libertarians, etc.? What core beliefs do you use to label someone as a libertarian, and ascribe to other libertarians?

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z9z99
on January 13, 2016 at 13:29:34 pm

When you refer to “libertarians,” do you have an archetype in mind?

Hm -- a fair question. I imagine laissez-faire folk, those opposed to regulation in general.

Some may be randier than others, I guess.

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nobody.really
on January 13, 2016 at 15:04:59 pm

1) "Some may be randier than others, I guess."

As in Senator Paul - ya mean that kind of "rand-y"

2) " I imagine laissez-faire folk, those opposed to regulation in general."

Hmmmm!!!! Vely interesting; I assume this means that you do not include any folks who favor regulation -such as that regulation (or, was it simply agency guidance) which compelled banks to ACCEPT sub-prime loans to sub-qualified applicants. right??
I mean obviously they are not at all to blame here, right????

In any event, it is not solely "libertarians" (however defined) that may oppose regulation. It would be helpful, if your often apt criticisms were not so overly broad and then focus that criticism in those areas where is is particularly applicable - I am not certain that it is applicable re: housing crisis / bubble / fiasco - whatever?

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gabe
on January 13, 2016 at 15:15:07 pm

Oops- forgot this with respect to the alleged benefits of regulation in the Housing Market;

http://www.nationalreview.com/corner/429693/affh-preview-obamas-hud-takes-over-dubuque-iowa

Is this the type of regulation that "libertarians" should not oppose wherein Dubuque, Iowa becomes a sub-municipality of Chicago, Illinois (or actually a sub-unit of H.U.D.?

seems like regulation is "fixin" to move us rite back out there!!!!

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gabe
on January 14, 2016 at 19:25:39 pm

I think this review confuses acting faults for screenwriting failures. And your real problem seems to be with Michael Lewis, who is not even mentioned in the review.

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Aaron J

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.